Trade Analysis and Recommendations for Trading the British Pound

The test of the 1.3336 price occurred at a moment when the MACD indicator had just begun to move downward from the zero mark, which confirmed a proper entry point for selling the pound. As a result, the pair dropped by 30 points.

Given the lack of important statistics from the UK, the pound performed rather poorly during the European session, losing part of the advantage gained at the end of last week. The absence of domestic drivers allowed other, predominantly external, factors to put pressure on the GBP/USD currency pair. However, it is clear that many market participants are gradually taking a wait-and-see approach, preparing for the release of important macroeconomic reports and decisions from the U.S. in the middle of the week.

Regarding the intraday picture, in the second half of the day we will only see data on U.S. factory orders. After the impressive leap demonstrated by the British pound last week, it will be extremely difficult for the U.S. dollar to turn the situation around relying solely on factory order data. The reason for this skepticism lies in several factors. First, expectations for these data are generally subdued. Analysts forecast moderate growth, which is unlikely to serve as a catalyst for significant strengthening of the dollar. Second, the British pound has recently shown resilience, supported by several positive economic reports from the UK.

As for the intraday strategy, I will rely primarily on the execution of Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.3330 (green line on the chart) with a target of rising to 1.3356 (the thicker green line on the chart). Around 1.3356, I will exit buy positions and open sales in the opposite direction (expecting a 30–35 point move downward from that level). Pound growth today can be expected only after weak U.S. data.Important! Before buying, make sure the MACD indicator is above the zero line and just beginning to grow upward from it.

Scenario #2: I also plan to buy the pound today in the event of two consecutive tests of the 1.3309 price at a moment when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to a market reversal upward. Growth toward opposite levels of 1.3330 and 1.3356 can be expected.

Sell Signal

Scenario #1: I plan to sell the pound today after the price breaks below the 1.3309 level (red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers will be the 1.3276 level, where I will exit sells and immediately open buys in the opposite direction (expecting a 20–25 point rebound upward). Pressure on the pound may persist today if U.S. data is strong.Important! Before selling, make sure the MACD indicator is below the zero line and just beginning to fall from it.

Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the 1.3330 price at a moment when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a market reversal downward. A decline toward the opposite levels of 1.3309 and 1.3276 can be expected.

Chart Explanation

• Thin green line – Entry price at which the trading instrument can be bought.
• Thick green line – Estimated price for setting Take Profit or manually fixing profit, as further growth above this level is unlikely.
• Thin red line – Entry price at which the trading instrument can be sold.
• Thick red line – Estimated price for setting Take Profit or manually fixing profit, as further decline below this level is unlikely.
• MACD indicator – When entering the market, it is important to consider overbought and oversold zones.

Important

Beginner Forex traders must make entry decisions with great caution. Before important fundamental reports are released, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you do not use money management and trade with large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Spontaneous decision-making based on the current market situation is an inherently losing strategy for an intraday trader.